XAS-2d: Native Treasury Amendment

[dazzlingxrpl]

XAS-2d: Native Treasury Amendment

Note: The suffix "d" in "XAS-2d" indicates this is a draft proposal. The "XAS" prefix stands for "Xahau Amendment Specification" and is used here for clarity and professionalism. This naming convention is tentative and subject to community consensus. If a different standard (such as XNS, XHS, or XUS) is adopted by the Xahau community, the proposal ID will be updated accordingly.

Author: Dazzling
Date: August 21, 2025
Status: Draft

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1. Abstract

This proposal introduces the Native Treasury feature for the Xahau network, an enhancement to the existing escrow mechanism. Unlike the current native escrow, which locks up XAH tokens and excludes them from balance adjustment (BA) rewards, Native Treasury allows accounts to lock XAH while continuing to claim BA rewards. Additionally, it enables flexible distribution of escrowed funds and BA rewards to multiple accounts and supports automatic reinvestment of rewards to compound over time. This feature aims to improve transparency, functionality, and usability for Xahau users, including businesses, individuals, and governance participants, by integrating treasury management natively into the protocol.

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2. Motivation

The Xahau network's native token, XAH, is inflationary due to the balance adjustment mechanism, which provides a 4% per annum reward to accounts based on their average balance to offset the high burn rate of XAH for smart contract (Hook) transactions. The existing Treasury Hook, developed by XRPL Labs, locks up 125 million XAH with a controlled monthly release of up to 2 million XAH, allowing BA reward claims but requiring custom Hook logic. However, the native escrow feature does not support BA reward claims for locked XAH, limiting its utility for long-term token management.

Furthermore, explorers like Xahau Explorer only display native escrow amounts, and major platforms like CoinMarketCap and CoinGecko report total XAH circulation without accounting for locked tokens in escrows or the Treasury Hook. This lack of transparency can mislead stakeholders about the effective circulating supply. The Native Treasury feature addresses these issues by:

• Enabling BA reward claims for locked XAH.
• Allowing flexible distribution of escrowed funds and BA rewards to multiple accounts.
• Supporting automatic reinvestment of BA rewards for compounding.
• Improving transparency by integrating with network explorers to display Native Treasury balances.

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3. Proposed Solution: Native Treasury

The Native Treasury feature extends the existing escrow functionality to create a protocol-level mechanism that allows accounts to lock XAH while participating in the balance adjustment reward system. It introduces the following capabilities:

1. Lockup with BA Rewards: Accounts can lock XAH in a Native Treasury, which remains eligible for the 4% per annum BA rewards, calculated based on the average balance. See the Balance Adjustments Technical Doc and Xahau Documentation for details.
2. Flexible Distribution: Users can specify up to 32 (or as many as the ledger can handle) destination accounts to receive monthly disbursements of escrowed XAH (e.g., a small percentage, user-defined) and/or BA rewards, similar to shareholder dividend distributions.
3. Compounding Option: An optional setting allows BA rewards to be automatically reinvested into the Native Treasury, compounding the locked balance over time.
4. Transparency Integration: Native Treasury balances will be exposed to network explorers, ensuring accurate reporting of locked XAH alongside native escrow amounts.

Example Use Case:
A company locks 10 million XAH in a Native Treasury to fund future projects. It earns 4% BA rewards annually (400,000 XAH), which are automatically reinvested to compound the balance. Alternatively, it distributes 10% of the BA rewards monthly to 20 shareholder accounts, with the remaining 90% reinvested.

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4. Technical Specification

4.1. Native Treasury Object

The Native Treasury will be implemented as a new ledger object, extending the existing Escrow object. It includes the following fields:

• Account: The account owning the Native Treasury.
• Amount: The total XAH locked in the treasury.
• DistributionAccounts: An array of account addresses for disbursements.
• DistributionPercentage: A user-defined percentage (0-100%) of escrowed XAH to release monthly (default: 0).
• RewardDistribution: A boolean flag to enable/disable BA reward distribution to DistributionAccounts.
• CompoundRewards: A boolean flag to reinvest BA rewards into the treasury.
• StartTime: The timestamp when the treasury is created.
• LastDisbursement: The timestamp of the last disbursement or reward claim.

4.2. Transaction Types

Example (Open for Community Feedback):

{
  "TransactionType": "TreasuryCreate",
  "Account": "rExampleAccount123",
  "Amount": "10000000000",
  "DistributionAccounts": ["rAddr1", "rAddr2", ..., "rAddr32"],
  "DistributionPercentage": "2",
  "RewardDistribution": true,
  "CompoundRewards": false,
  "NetworkID": 21337
}

Note: This example is for illustration only. Please suggest improvements or point out missing information to help refine the proposal.

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5. Benefits

• Enhanced Flexibility: Users can tailor treasury management to suit business or personal needs, such as shareholder distributions or long-term savings.
• Reward Optimization: Enables BA reward claims for locked XAH, unlike native escrow, maximizing returns.
• Compounding Growth: Automatic reinvestment supports long-term value appreciation.
• Transparency: Integration with explorers ensures accurate reporting of locked XAH, improving market clarity.
• Ecosystem Growth: Encourages adoption by businesses and individuals through robust treasury management tools.

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6. References

• Xahau Network Documentation
• Treasury Hook by XRPL Labs
• Xahau Whitepaper
• Xahau Testnet

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This proposal is a draft and subject to community feedback. Please submit comments or suggestions.